If you hear the word entrepreneur and immediately picture a young person in a baggy hoodie working in a converted garage or dorm room, you may have some reimagining to do. More baby boomers and senior citizens are starting their own businesses, proving that entrepreneurship really has no age limit.
The rise of the so-called “seniorpreneur” (or “encore entrepreneur”) shouldn’t be surprising. As boomers age and the U.S. greys, there are simply more older Americans in the workforce than there used to be. While workers age 55 or older made up just 12 percent of the workforce in 1994, their numbers nearly doubled to 25 percent by 2014, according to the Bureau of Labor Statistics.
“A big component of the increase in older Americans launching more businesses is a reflection of a general demographic shift in the make up of all Americans,” Derek Ozkal, a program officer at the Kauffman Foundation, said in an interview. “Essentially, Americans are getting older, and they are working longer. Some of that working later in life is self-employment.”
A report published last year by the Kauffman Foundation found overall entrepreneurship rates have changed drastically over the last decade. In 1996, a little more than one-third of all new businesses in America were started by entrepreneurs aged 20 to 34 compared to just 14 percent for entrepreneurs 55 and older. In 2015, 20-to-34-year-olds started just 25 percent of new businesses, while the percentage of seniorpreneurs ballooned to 24 percent.
One of the reasons for the growing number of older entrepreneurs is that many boomers are not ready to give up working. For people who have aged out of full-time work but are reluctant to trade in their day jobs for retirement, starting a new business is an exciting alternative. The top reasons older entrepreneurs listed for starting a business in a Gallup poll conducted last year were independence, passion and an income boost.
Brian Kearns, founder of a Kansas City startup called HipHire, is a perfect example of a boomer who started a business in order to extend his career. Kearns is in his early fifties and in 2013 launched a staffing agency that helps local small businesses find part-time workers. His former position as a director of human resources provided him with ample experience to make his new company a success. Decades of on-the-job experience helped him understand the job market in ways that younger entrepreneurs might not be able to, he explained.
“I saw a lot of problems that can happen when hiring people at a high level,” Kearns said. “We had a unique culture [at my previous job] and I wanted to see if there was a way to bring that culture to these small businesses that are struggling.”
Older entrepreneurs who launch businesses often tend to benefit from more access to capital – a factor that stops many startups from ever getting off the ground. In fact, when it comes to funding, older entrepreneurs have a distinct edge on most of their younger counterparts, according to Robert W. Fairlie, a professor of economics at the University of California.
“Older individuals tend to have more wealth,” Fairlie said. “More home equity and wealth, as well as a lot more experience, that is relevant for starting a business.”
Although not all seniors who decide to start a business do so out of a sense of opportunity. For some, entrepreneurship is a necessity—a testament to the fact that finding a new job can be difficult for older workers, particularly in a post-recession economy. A 2013 survey conducted by nonprofit AARP shone a spotlight on this problem.
“About one quarter (26 percent) of older workers report that they have experienced at least one … discriminatory practice, a figure that rises to nearly six in 10 (56 percent) among those currently looking for a job. Nearly half, 47 percent, of those looking for a job report that they were not hired due to their age,” researchers wrote.
The study also found a staggering three in five older workers reported having seen or experienced age discrimination in the workplace.
“Age discrimination is the last form of discrimination that we are willing to accept,” Laurie McCann, an attorney for AARP’s Foundation Litigation, told CNBC earlier this year, lamenting the fact that “it’s not viewed as wrong or as serious as other forms of discrimination.”
To Kearns, the Kansas City entrepreneur and a career human resources expert, such discrimination seems very short-sighted, as the benefits and years of experience that older workers bring to a business can prove incredibly beneficial. However, that isn’t always apparent, and he isn’t surprised by the growing number of older workers going out on their own.
“I can avoid mistakes that a younger entrepreneur might not recognize,” Kearns said. “They may have the ability to work 24 hours day without sleep, but the ability to dodge the pitfalls of an industry sometimes matters more than the hustle.”